Father of Index Funds

John Bogle has many books to his credit. We all may benefit from reading one or more of them as a part of a New Years Resolution focused on Raising Our Financial Literacy! A perfect Stocking Stuffer, with a future focus in mind! John C. Bogle, the founder of Vanguard, changed investing forever for ordinary Americans, and wrote a dozen books over his lifetime, selling over 1.1 million copies worldwide.

An editor that worked with Bogle said, “I don’t think there’s an author who spent greater care on the words he chose,” and, “when he did a book, he was so meticulous; he’d rewrite and rewrite. He always went the extra mile to make sure there wasn’t a single person who could not understand what he was saying.”

“Jack,” as he was referred to by many, made it his mission to educate people about the benefits of index funds and not paying high fees to mutual fund managers. Below are some of the best books he authored:

1. Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor

The first edition of this classic was published in 1999, and Bogle wrote a completely updated second edition a decade later to help investors understand mutual funds and how his simple and low cost investing strategy can be used to outperform stock pickers.

2. The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns

This 304-page hardcover book is one of Wiley Publishing’s Little Book investing series and has proven to be an incredibly popular tool for investors. In this investing bible, Bogle presents his ideas succinctly for the layman.

• Warren Buffett advised in his 2014 letter to shareholders that rather than listen to the “siren songs” of advisors, “investors – large and small – should instead read Jack Bogle’s The Little Book of Common Sense Investing.”
• Bogle said even he needed to be reminded of his own advice in trying times. “How do I feel when the market goes down 50%?” he continued. “Honestly, I feel miserable. I get knots in my stomach. So what do I do? I get out a couple of my books on ‘staying the course’ and reread them!”

3. The Battle for the Soul of Capitalism

John Bogle was a vocal critic of Wall Street and the American financial system, and in this book the insider revealed what he knew about the unethical practices of money managers and corporate executives, which add costs to millions of small investors.

• The New York Times called it “yet another important contribution in an illustrious career,” and it was long listed for the Financial Times and McKinsey’s Business Book of the Year Award in 2005.

4. John Bogle on Investing: The First 50 Years

Bogle’s senior thesis at Princeton University was titled “The Economic Role of the Investment Company,” and it contained the very ideas that Vanguard would be built on. It is included in this compilation of his best speeches.

5. Stay the Course: The Story of Vanguard and the Index Revolution

At the time of publication, Vanguard had more $5 trillion in assets under management, and the road to that number wasn’t easy. Early on it was dubbed “un-American” and mocked by Wall Street professionals.

• Named after his most iconic piece of advice, Bogle’s last book is a memoir that traces the history of the Vanguard Group and provides new details. He addresses his critics, his regrets and even his Vanguard successors.

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Courses to Consider: Creating More Financial Freedom / Mastering Business Essentials

Financial literacy is the foundation of our relationship with money, and it is a life-long journey of learning. The earlier we start, the better off we will be, because education is the key to success when it comes to money, and our financial life is likely to become more complicated as we get older.

Becoming financially literate involves learning and practicing a variety of skills related to budgeting, managing, and paying off debts, and understanding credit and investment choices. Personally, we have more energy around creating an effective spending plan, than a budget! Basic steps to improve our personal finances include creating a spending plan, keeping track of expenses, being diligent about timely payments, being prudent about saving money, periodically checking our credit report, and investing for our future. Financial literacy is the ability to understand and effectively use various financial skills, tools, and processes; including personal and business financial management, spending plan creation, and investing, while learning to live on less than we make!

We believe financial literacy is one of the most important things we can learn and help others learn, and the learning never ends. We believe the subject qualifies as a mandatory part of primary education. Yet presently, it is only a required course in public schools in just 17 states in the USA.

Given that college students graduate with an average of $32,000 in debt due to student loans and credit card debt, and on average, a graduating dentist in 2020 reported close to $300,000, in dental school debt (ADA).

Therefore, we believe, it is imperative that young people learn the basics of credit, debt, spending plans, saving, and investing before they face that burden. It is never too late to become financially literate, and the earlier we start, the better.

We are adding some basic financial literacy lessons into the intentional design of our coursework. Come join us and devote appropriate time and energy to really getting on top of personal and practice finances.

2021 Pankey Financial Course Offerings:

• Mastering Business Essentials (MBE) – April 29th – May 1st

• Creating More Financial Freedom – August 20th – 21st

In times of disruption, small changes can have a large impact. Follow the 5 P’s and see where Proper Planning to Prevent Poor Performance leads you.

Those of you who experienced the joys of boot camp may remember the 5P’s: Proper Planning Prevents Poor Performance. Since we are all stuck waiting to get back to the office, now is a great time to work on plans for a preferred future.

Although we will be opening in a disrupted world and the market we left has been transformed by forces outside our control, good business principles and practices remain valid. Here are some key performance indicators adapted from Roger Levin’s 2019 article about the KPI’s every dentist should know.

Production, Collections and Profit

Review your production, collections and profit for the last 12 months. Levin points out that the trend on each of these items should be up. Sounds simple but it is not. Dig in and analyze deeper. Start with monthly figures and look for trends, then weekly and daily. What are your most productive procedures, days, time of days? When was your last fee increase? Analyze your outstanding accounts. You should be collecting 98% with only a small percentage over 60 days outstanding. How much are you writing off due to insurance mandates? How profitable are you? Have you set any goals? Understand that any item in your practice that is not true overhead is profit. Now you are ready to start working “on” your business.

What percentage of your active patients is currently scheduled? Nobody should every leave your office without another appointment. Your goal should be 98% of active patients are scheduled for some form of care. What is your case acceptance rate? Are you tracking patients with planned treatment that is not scheduled? What is your average production per patient? What is your average production per new patient? It should be at least two times greater than existing patients. What is your hygiene cancellation rate? If you are not happy with what you are learning, now is the time to be planning for better outcomes.

Overhead

Now is the time to carefully assess every item included in your overhead. If you have a practice generating a million dollars, a 2% decrease in overhead is $20,000 directly to profit. Levin Group tells us that general dental practices should have overhead at 59%. Very few practices meet that goal. It is very likely that new mandates from the government will be coming for PPE and testing. Now is the time to get lean and mean in this area.

Patients

Are you tracking your monthly new patient growth and your patient attrition? With all the media attention to aerosol spreading of Covid-19, it is likely there will be resistance to treatment and dentistry in general. Knowing your current situation is important. It is imperative that you use every means available to help your current and new clients understand that you are concerned for their health and safety as well as to emphasize that deferring treatment will only lead to future more difficult and expensive problems.

Staff Costs

The elephant in the room…staff costs in a general dental practice should be 25% of collected production. Your team members are the most expensive and most important part of your business. You may want to share your homework with your team – or even involve your team in the exercises above.

We are “all in” on getting ready for our office to re-open. We have been in dialogue with our team members, reviewed our cleaning, asepsis, OSHA protocols, and worked out client and staff management protocols that follow the ADA guidelines. We are ready to go! However, our governor may prevent us from starting for another month. If that happens, we will have lost a full three months of production – one quarter of the year. 

We can never regain that lost revenue. Like the car salesman who does not close the sale, the money that was going to pay our fees is now gone forever as it has been spent somewhere else. If you want to understand a bit more about the mathematics of loss, take a moment to read this letter from Steve Blumenthal. The letter is old, but the math still makes sense and it is not pretty.  

“The New Normal” 

Like many of you, we have been “Zooming” into a variety of web-based CE on how to manage the new normal. The new normal to us looks like less productivity and higher overhead. The new normal also looks to us like a time when our clients and staff will feel a sense of increased vulnerability, so it is imperative that everything we do at every touchpoint is focused on active listening, positive messaging, and mutual respect.  

The Question of Fees 

This leads to the question of fees. Some presenters are suggesting adding charges for PPE or raising fees in general. Our opinion is that, as a nation, we are about to enter a period of deflation. If our clients are worried about maintaining their jobs, they are not going to spend discretionary dollars. We are very unlikely to see a V-shaped recovery. Our government has poured a great deal of money into the economic system, but fearful people will not spend if they are not sure of a paycheck.  

Most of us will have to eat the added overhead in our practices. In fact, many practices will look at staff costs and decide to run with less people. You can count on insurance carriers to use the pandemic to push on dentistry to accept lower reimbursement.  

Our Plan 

We know we will lose production until we refine our new systems. We are asking our team members to consider flex time until we can ramp up and have everyone working effectively. We are asking team members to multi-task so we can avoid adding extra people for the increase in sanitation needs. We are revamping scheduling and hours to get maximum productivity with patient flow that will be less than the old normal.  

We have mapped out projected production and can meet reasonable goals under the new model with no fee increase for now. We plan to hold the line for four months and then we will have a fee increase. How much? We do not know yet, but we project at least 3 – 5%. We believe that amount will be accepted by clients and will cover most of the cost of increased overhead. We do not foresee the fee increase dropping the bottom line. If you want to share what you are doing, feel free to do so in the comments section of this blog. 

More than 31% of solo practicing dentists today are 55 years or older. Since most dentists have traditionally retired between 60 and 69, retirement is a “hot” topic.

Future Financial Need

Goal setters who have planned for retirement since the beginning have accumulated five times what a non-planner has saved. Yet, baby boomers (now mid 60’s to 70’s) have reinvented each phase of their lives, never matching what has been customary. An ADA survey indicates dentists save 10.6% of their income which is below the federal limit of 15% contributions to a qualified pension fund.

Financial advisors think you will need from 70 to 90% of your current net income in retirement. The average dental net in 2019 was nearly $200K. In retirement planning, eighty percent of that is $160K, which is $13,350 a month. If you retire at age 60 and live another thirty years, you will need $4.8M from interest and savings.

Retirement Choices for Today’s Boomers

The figures are staggering for the slightly unprepared. What are the choices for today’s boomer dentist? Sale? Partnership? Associateship? Retire as you go? Or, will you up your game plan for 5 more years? Let’s investigate.

Sale: A sale is currently worth about 24 months of net income which is then taxed. Beware. A sale is final. You are no longer a dentist in that location. There is no going back. The book is closed.

Partnership: Partnerships in retirement have their own pros and cons. By reviewing what motivated you to enter the profession, you may find independence and freedom on your list. Selling half your practice to an unknown partner means you have surrendered your freedom and half your net income in exchange for about nine months of net income. The staff will still look to you for leadership.

Associateship: Becoming an associate after thirty years of private practice could be successful if you have the qualities to be an employee. Will you be happy doing dentistry for someone else? Do you have the qualities to be a team player under someone else’s leadership and rules?

Continue Your Own Practice by Retiring as You Go: Continuing to practice beyond the average retirement age is a viable alternative. The real advantages to keeping your own practice viable are the continued net income, ability to deduct expenses such as continuing education and a leased car, and the psychological rewards of feeling needed, serving others, and your earned status in the community.

Continuing your own practice can be done on your own terms. You can design your ideal practice days, plan your continuing education around travel adventures, and attract staff to work your schedule. You may want to work three days a week for three weeks and take the fourth week off. If you can continue to work on your own terms and have a substantial income that does not require using your retirement funds until you choose, count the advantages and your blessings.

Continue Your Own Practice by Upping Your Game: Another viable choice is to “Up Your Game” and actually make an extra $2M by increasing net in a five-year plan. This can cause a $900K increase in the eventual sale price. We have a number of very pleased retired dentists who upped their game in their 60’s. They can’t believe how much more enjoyable practice is again.

Upping your game means increasing your dental skills and your treatment offerings, installing strong systems of block booking to produce more in fewer days, solid sales conversations for an increased level of patient care, and having an accountable accomplished team marching with you. Because you have upped your skills and are focused, you can actually take more time away as you increase your net. 

Which Choice Is Right for You?

Examine your financial needs. Examine why you enjoy dental practice? Examine your options and spend time thinking about which retirement option feels most comfortable to you. We can help. Many of our clients have chosen to stay part of dentistry, and we have observed that when dentists keep up with continuing education and become skilled at working with new materials and techniques, they gain more than an enhanced income stream. They feel a rebirth and rejuvenation about their profession.

On January 10th, 2020, The Wall Street Journal published an article on the changing patterns of retirement. It is worth a look. After 43 years in the world of dentistry, I have now survived three years as a “retiree” and have a few comments about preparing for and transitioning into this significant life event.  

Preparation Tips 

1. Before you “pull the plug” on work, start to figure out what you would like to do when you have more time. My unhappy retired friends generally failed to do this. I suggest you build on the things you like to do. Include personal time and together time with your spouse. Look forward to a new challenge such as learning a new language or trying your hand at gardening. If you are not now in a service club or a similar group, you will have the time to try that.  
2. With your spouse, discuss how you will manage money. Long before retirement, create your retirement budget and financial growth plan. The Pankey Institute curriculum will help you with this.  
3. Be genuinely interested in others. The happy retirees I have met talk much more about the new friends they have made than about themselves. They are outward-focused and active listeners.   

Transition Tips 

1. Create a schedule and stick to it. If you used to get up at 5:30 am and liked doing so, don’t change. Just get up and do something you did not have time to do in the past.  
2. Be committed to your plan. Intentionally stick to your financial and time management budgets.
3. Stay involved in dentistry if you love it. Keep your membership in organized dentistry and your study club. Be a mentor and continue to learn. If I am fortunate, I will help a few young dentists be more successful and avoid some of the errors I made. 
4. Meditate on L.D. Pankey’s Cross of Life. Be committed to spending social time with your family and friends, even volunteer for their causes. And don’t forget your spiritual life. I’ve been amazed at the nice folks we’ve met at church who are interested in us as people and not as what we did in our careers

Final Thoughts 

If you are 30 and have not started to think about retirement, it is time to start. The successful economics of retirement takes time and commitment. If you are nearing the years when you will retire from practice, start thinking about your future lifestyle now. Keep in mind that a life well lived is a happy one. Continue intentionally “giving back” after retirement, and you will continue to make memorable, good things happen for yourself and others. 

Theresa Duncan from Odyssey Management has been one of the top 25 women in Dentistry, and for over 20 years, she has advised dental offices on how to correctly use insurance to their advantage and how to carry out a conversation about insurance.

Why? Because one of the biggest barriers to patient conversion is fear about how much it is going to cost.

Her book, ‘Moving Patients To YES!‘, doesn’t help only insurance dependent dental offices. It also helps insurance independent or blended practices have easier conversations about nonparticipation and out-of-network services.

The latest trends she is reporting will set you on the edge of your seat, because just when you thought it couldn’t get any worse, it has. And, this brings us back to the consideration that nonparticipation or getting off of plans might be best for you.

In a recent conversation, Duncan reported there are big changes being made in plan designs and how patients are getting their information. The plans are so difficult to understand that the front office of the dental practice is put in the spot of having to translate them. Patients get their plans and don’t understand what they mean. The plans are confusing even to professional insurance coordinators.

Patients are paying more for their benefits, so they are expecting to get more, which is unfortunate because dentists can’t deliver more. Duncan is seeing a lot more deductibles. The upshot is that more employees are opting out of dental benefits.

Dental practices, especially solo practices, now have less power to negotiate with insurance plans.

In the last twenty years, dentists have gone from “laughing at plans to getting on plans,” even rushing to get on them. And then, reimbursement got pushed down. The average dentist (according to the last ADA numbers) will participate in 8 to 10 plans, but Duncan sees the trend is now swinging back towards being selective and getting off of plans. Many dental offices are happy being in 3 to 4 plans. They don’t want to deal with plans that are costing them too much in revenue and time.

If you drop plans (or have never participated in plans), it doesn’t mean you lose patients, says Duncan. It means your team needs to be highly skilled at having conversations with patients when the topic of insurance arises.

On October 1, 2018, I retired from my solo private practice of twenty-eight years in the rural town of Wolfeboro, NH. During my years of practice, I sought continuing dental education from organizations like The Dawson Academy and The Pankey Institute to advance my technical skills. At the same time, I was a student of communication reading numerous books by authors like Travis Bradberry, Dale Carnegie, Stephen Covey, Kerry Patterson, and John Maxwell. In 2009, I received a master’s degree in strategic communication and leadership from Seton Hall University. My story is one of joy, fulfillment, and financial success.

For twenty-eight years, I practiced dentistry without the influence of dental insurance, never participating with any PPO’s or Premiere programs with set fees. And in spite of that, my practice thrived. Was it because I was good at my craft? Maybe. I attribute my joy, my fulfillment, and my financial success to the deep relationships I fostered not only with my patients, but also with my staff.

An Unhappy Time in My Life

Early on in my career, I admit that I focused too much on the “numbers” or the financial side of my practice. My mood was often like a rollercoaster. When the numbers were “up,” I was “up.” When the numbers were “down,” I was “down.” In addition, patients frequently refused my treatment recommendations. It was an unhappy time in my life, and I was heading towards burnout. I was often angry and frustrated making everyone in my path miserable.

On occasion, my wife would tell me, “I know that in your heart you mean well, but sometimes your delivery stinks.”

I knew I couldn’t continue this way, and so with some trepidation, I set out to change. I knew this self-examination would be humbling as I took a hard look at myself, my poor communication, and my poor leadership. I knew that before I could lead my staff, I had to get myself straightened out.

A New Focus on “We”

In my searching, I learned that “you can’t give away what you don’t own.” Through lots of study and reflection on my less-than stellar communication skills, I was able to change my “me” focus into a “we” focus. Instead of my usual focus on money or “the golden eggs,” I started to focus on my staff and my patients, the “geese that laid the golden eggs.” And as a result, an interesting thing happened regarding the income of my practice. Instead of “me chasing it, it chased me.”

Lots of the practice management courses today emphasize the transactional or money aspects of running a dental practice: scheduling, collections, website design, marketing. There is no question that these areas are important and are necessary aspects of running a dental practice. However, in my opinion, lasting change and growth in a dental practice starts with the dentist’s thinking and his/her ability to communicate effectively.

In Part 2, I will outline some transformational life-changing concepts with the hope you, the dentist, and your team will experience the benefits of improved communication.

Buyers are actively seeking dental practice opportunities all over the country. With the influx of doctors to desirable areas, sellers must have a strategy for how to identify the right buyer for their legacy practice.

Navigating the Best Transition For Your Dental Practice Legacy

Complementary technical skills to properly care for a patient base are essential. Behavioral considerations like interpersonal skills and communication are part of the success of a relationship-based practice. Timing and financial considerations play a large role in buyers identifying their opportunity as well. Working with a seasoned transition consultant allows for the vetting of these necessary components.

Some practice brokers seek a transactional experience for a changing of the guard with a processing of documents and a single strategy for its completion. This is driven strictly by financial and legal considerations. That transactional mindset is what you have been working to avoid in your practice for a career. So why would you consider growing your practice or ending your career with a philosophy that goes against the grain of what your practice has become?

Curiosity Driven Dental Practice Transition Strategies

Why not become curious about practice transition strategies? You could explore a co-discovery experience of what best fits your practice model and philosophy. Asking more questions and learning more about what makes your practice a successful legacy is the first step.

Transition consultants offer a complete approach to evaluate your relationship-based practice. The approach seeks all the financial and legal considerations plus works to transfer the technical, behavioral, and business culture. The purpose of this is for continuity in your practice and security for your future built on strategic solutions. Finding a transition consultant with successful business experiences helps make them uniquely qualified to collaborate with you to develop your strategic transition or expansion solution.

Whether you are a specialist or a general dentist, seek a consultant that will perform a comprehensive exam on your practice. They should report their findings with a thorough and professional strategy to meet your wants and needs. Developing a legacy plan for your relationship-based practice model that creates opportunity and security for your next phase must be intentional.

Are you ready to discover the best strategies for you and your practice future?

As dental practices grow and change, new seasons bring opportunity and security for both sides of a transaction. Charting a new path can be stressful and uncertain as many practitioners have not weathered a transition in years.

Considering a Transition Change In Your Relationship-Based Practice?

Young dentists are often seeking that opportunity for the first time. Experienced doctors often bought a practice many years ago or started their practice from scratch as a young doctor themselves.

The practice climate is changing! It is a competitive market with educated young professionals seeking the right opportunity and practice owners wanting to finish well while leaving a legacy with their practices better than they found them.

Organizational changes in practices can take many paths. Growing a practice through a merger or partnership brings its own set of challenges and opportunities. However, a practice based on relationships with patients, teams, referral bases, and communities requires special care.

Evaluating Your Practice Philosophy During a Transition

This process can be a stressful distraction to owner dentists. Those dentists that have committed their professional growth to technical excellence and relationship-based practice culture may need strategic help in navigating the right practice transition.

Dental practice transitions have been around for decades. Selling a practice to a young colleague and walking away has been the standard solution. Today, there are many different solutions that reach the goals of the seller and the buyer. Many relationship-based dental practices are seeking a like-minded professional to carry the torch and move the practice legacy forward. This goal requires intentional planning and careful follow through.

The time to evaluate practice philosophies is BEFORE a transition occurs. Examining wants, needs, timelines, and the type of transition that best suits those needs develops during the pre-sale process. You likely didn’t build your relationship-based, highly technical practice by doing what everyone else has done.

Becoming an expert in your field has been intentional and constructed with the concept of excellence and communication as a basis for that success. When it’s time to expand your dental practice or find your successor those same themes should continue.

To be continued…